Unlike Warsaw which tied the limits to a gold standard, Montreal uses a basket of currency approach called SDRs (Special Drawing Units).
The airline is “strictly liable” for the first 100,000 SDRs, and for proven damages above that the airline is liable unless it can prove it was not negligent. In other words, the first 100,000 SDRs are no fault, but fault is required above that amount).
Comparative negligence rules apply in all cases (even under 100,000 SDRs).
Aircraft manufacturers and other third parties are not covered by this law.
Forbids the use of hold-harmless/indemnification/ exoneration clauses that would limit the carriers liability below that specified in the statute.
Since the 1995 Sky Reefer case, this law permits choice of forum clauses that require these cases to be litigated in foreign countries. This is often used, resulting in fewer cases being filed in the U.S.
There is a one-year statute of limitations and a 3-day notice requirement for latent damage.
Bill of ladings refer to “shipper’s weight, load, count”
Won’t save the carrier if the weight is verifiable.
If no verifiable weight is provided, carrier not liable.
COGSA Sec. 1303(3): After receiving the goods into his charge the carrier. . .shall on demand of the shipper, issue to the shipper a bill of lading showing: (b) either the number of packages or pieces, or the quantity or weight . . . as furnished by the shipper or (c) . . . No carrier shall be bound to state or show in the bill of lading any . . . Quantity, or weight which . . . . he has had no reasonable means of checking.
Unless you declare a higher value (and pay a higher freight fee) the maximum carrier liability is $500 per package.
What is a package? COGSA doesn’t say, but custom says is a “class of cargo, irrespective of size, shape, or weight, to which some packaging preparation for transport has been made which facilitates handling” even if it doesn’t conceal the goods.
See Z.K. V Arch?V Archigetis case (p. 211) where yachts were declared packages subject to the $500 limit.
What about a container? Look at the bill of lading – if it indicates a number of packages inside, multiply that number by up to $500 each, if not then only $500.
Individual items do not necessarily equal packages – i.e. the case of 7,790 live plants (p. 213). Items on pallets can either be one package or the number of items on the pallet depending on whether the pallet is wrapped in see-through polyethylene shrink-wrap or not. Moral: always follow good shipping practices of hire someone who will. Examples (which is best?) 1 X 40ft. Container 1 X 40ft. Container STC 12,000 bottles of red wine, or 1 X 40ft. Container STC 1,000 cases of red wine, or 1 X 40ft. Container STC 1,000 packages(cases) of red wine The $500 limit won’t apply to material deviations such as detours or storing non-containerized goods up on deck. Wait, It Gets Even More Complicated
They are agents for shippers who help in contracting with carriers. They advise shippers, make contracts with carriers, get cargo insurance, assist in packaging & containerizing, arrange warehousing, and act as customs brokers (i.e. prepare customs documents and getting goods through customs).
It the goods are damaged in transit they are liable if they did not act reasonably or follow due diligence standards.
NVOCCs* perform many of the same functions as a freight forwarder, but by combining small loads in one container they are also deemed to be carriers.
From THE IMPACT OF THE OCEAN SHIPPING REFORM ACT OF 1998:
Numerous pro-competitive reforms enacted under OSRA to increase industry market responsiveness focused on service contracting. The ability to deal with individual carriers, the elimination of the “me-too” requirement for similarly situated shippers, and the confidentiality of certain commercially sensitive service contract terms have fostered a shift to contract carriage -- carriers generally report that 80 percent or more of their liner cargo currently moves under service contracts.
• The 200 percent increase in the number of service contracts and amendments filed since May 1999, as well as the increase in the volume of cargo moving under service contracts is due, in part, to the flexibility and confidentiality of individual service contracting.
• Most shippers presently are negotiating one-on-one with individual carriers for confidential service contracts, instead of negotiating with rate-setting conferences or groups of carriers.
Marine Cargo Insurance Covering the bearer of the risk of loss
Individual policies are good, but large volume shippers maintain open cargo policies (think of big borrowers who need open lines of credit). The open policy covers all shipments by the shipper of certain goods over specific routes to specific destinations. The insurance company provides a form “certificate of insurance,” which are often used in CIF shipments. They are negotiable and go along with the bill of lading. In a plain CIF contract the certificate will suffice in the U.S., but not in the UK.